City Hall has threatened to auction nearly 200,000 properties whose owners have not been paying land rates, in pursuit of Sh54 billion.
The Nairobi City County government has blamed wealthy property owners for failing to pay the rates, despite other sectors contributing to county revenues. It has also hinted at moving away from the current model of levying rates based on land value towards one based on a property’s use.
Governor Johnson Sakaja said that up to three-quarters of property owners in the capital have not been paying rates.
“Out of 250,000 land parcels in the city, we have only 50,000 to 60,000 accounts that are paying rates. Every city in this world relies on property rates as their biggest revenue source,” he said.
The governor blamed the low compliance rate for the county’s low own-source revenue (OSR) collections at a time when the National Treasury has been struggling to disburse cash to counties.
The county’s OSR — fees and levies charged to businesses and for access to services — hit Sh13.5 billion in the year ending June 2025. This marked a growth from Sh12.8 billion in the previous year.
While land rates remain the biggest contributor to Nairobi’s revenues, generating Sh3.25 billion in the last fiscal year, the revenue stream has dropped from 27 percent to 24 percent of the capital's OSR over nine years.
During the year ending June 2025, City Hall undertook a data clean-up of unpaid land rates, writing off debts totalling Sh1.45 trillion. This left Sh54 billion as the amount currently claimed from property owners.
The city county has not clarified how the exercise was undertaken or the circumstances surrounding the substantial write-off. The Sh1.45 trillion removed from its books could fund the county for 43 years, working with its total spending rate of Sh33.53 billion in 2024/25.
City Hall argues that Nairobi’s total revenues, including OSR and national revenue share, could rise from Sh36 billion to Sh50 billion if property owners pay their rates.
“You’ll see us clamping and auctioning property because people must pay,” Governor Sakaja said.
City Hall is going hard on the property owners following the enactment of a law empowering counties to auction properties to recover unpaid rates.
The National Rating Act, 2024 requires counties to levy interest and penalties on property owners who default on payment of rates, and even deny them county services, before auctioning the properties.
“Where any rate or any part thereof remains unpaid after the day on which the same became payable and the rateable owner has been notified to make payment and defaults at the lapse of the notice period, the county government may, for the purpose of recovering the rates due auction the rateable property at the current market value in accordance to the provided procedures to recover the rates due,” the law says.
Counties are, however, required to provide details on the enforcement of payment of rates in their legislation.
While the Act empowers counties to levy rates on land and buildings, it also offers flexibility to allow counties to decide whether to apply a flat rate to an area of land, a graduated rate to an area of land according to its acreage, or a differential graduated rate to an area of land according to its use.
Governor Sakaja hinted that the county was considering implementing a rate based on a property’s use.
“This is the only capital where we actually charge rates on undeveloped site value. So, half an acre of land in Kileleshwa with one house, for instance, is paying the same (rate) as the neighbour with 60 houses, yet they need water and use our roads,” the governor said while indicating that the county was in discussions to change the rating model.
